Bankruptcy trustee Peter McKittrick, who is
in charge of liquidating the Oregon City mill's assets, notified Judge Randall
Dunn on Monday that the deal was off.

Langley had until the end of January to
complete its due diligence. Thornton said several more months are needed.

Initially, Langley believed it could move
quickly by "piggybacking" on previously
compiled reports and research "but they were inadequate for what we needed,"
Thornton said.

McKittrick said he was unwilling to extend
the deadline. "It's a money issue," he said.

It costs $30,000 to $40,000 to cover
operating and maintenance costs and eventually there will be no money left for
creditors or former employees, he said.

McKittrick said continues talking to prospective
buyers there are no imminent offers.

McKittrick's other options are an auction or
abandoning the property.

Langley had 24 months to compete the purchase
and would have paid $4.9 million if the deal closed in 12 months. After that,
the price went to $5.75 million. Langley
would have $30,000 a month in return for the lengthy closing deadline.

The monthly payment would have offset the
cost of maintaining the 23-acre site, which has around 50 buildings.

Last year, Irvine, Calif.-based Eclipse
Development Group, offered to buy the mill site for $4.1 million. The deal fell through in October when Eclipse was unable to come up with the money.